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Dillard’s Inc. of Little Rock on Thursday reported a much-improved third-quarter profit, but the beleaguered department store chain remains on track for a fiscal-year loss.
Dillard’s (NYSE: DDS) said third-quarter net income rose to $31.9 million, or $1.43 per share, from $5.5 million, or 22 cents per share, in the same quarter of last year. But total retail sales, which exclude revenue generated by its construction company, CDI Contractors LLC, declined 25% to $994.6 million.
Earnings, adjusted for non-recurring costs, were $1.49 per share, exceeding Wall Street expectations. The average estimate of five analysts surveyed by Zacks Investment Research was for a loss of 86 cents per share.
Same-store sales, a key metric in the retail industry, fell 24%.
During the quarter, company expenses fell by about $100 million amid reduced operating hours — and reduced payroll expense — during the pandemic. The decline in sales activity also left the retailer with unsold inventory, which it’s been working to unload.
“We have worked hard on inventory and expense control in unpredictable conditions throughout the pandemic,” CEO William T. Dillard II said in a news release. “We achieved a 249 basis point gross margin improvement for the third quarter with ending inventory down 22%. Additionally, we cut expenses $100 million. As we enter this holiday season, one thing we can predict is the dedication of our associates and their exceptional service to our customers.”
The company declined to provide detailed guidance for the next quarter, apart from confirming that it “expects to be in a net operating loss position for the fiscal year.” For the 39-week period that ended Oct. 31, Dillard’s reported a net loss of $138.7 million, or $6.05 per share, compared to net income of $43.4 million, or $1.69 per share, for the comparable period in 2019. Net sales were $2.73 billion, down from $4.28 billion.
For the quarter, Dillard’s home and furniture categories “significantly outperformed” all others, followed by ladies’ accessories and lingerie and cosmetics. Ladies’ apparel was “significantly below trend,” and the Eastern region moderately outperformed the Central and Western regions.
Quarterly net sales, which include CDI revenue, were $1.02 billion, down from $1.39 billion in the same quarter last year. Revenue fell short of analysts’ expectations of $1.21 billion.
Dillard’s said it repurchased 600,000 shares worth $19.5 million during the quarter. It also announced that it plans to close its 200,000-SF Paradise Valley Mall location in Phoenix by the end of the fiscal year.
The company operates 250 Dillard’s locations and 32 clearance centers spanning 29 states. Total store square footage on Oct. 31 was 48 million.
Dillard’s shares have fallen 39% since the beginning of the year. In the final minutes of trading on Thursday, shares hit $45, a decline of 33% in the last 12 months.
(The Associated Press contributed to this report.)